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Risk management: A CIO’s strategic role

Kim S. Nash | Jan. 27, 2011
CIOs have a unique responsibility to identify the systems and data that executives need to manage through a crisis or make decisions in times of rapid change

FRAMINGHAM, 27 JANUARY 2011 - MIT professor Michael Cusumano explains the CIO's special role in guiding a company's strategic use of information in a crisis.

Your new book is about managing strategy in turbulent times. What factors must a CIO, in particular, balance when responding to a crisis?

In different kinds of crises—product, economic, political—one common thread is the information available to executives.

In the Toyota recalls, we now know there were a number of cases of poor quality going back to the mid-1990s. Frame corrosion in trucks in North America. Pedal problems first in Europe. Software problems with braking in the United States and Japan. None of that information was aggregated, analyzed and presented to senior executives.

CIOs can make sure that the information systems are available for aggregating reports from the field or news media. But it’s not just a technology problem. People have to respond to the data. It has to be put into a form that senior executives can absorb quickly on a regular basis.

CIOs need to champion not only that the IT systems are there. They have to try to make sure the processes are in place to use the information.

You have lots of indications that the whole credit market was put in a very high-risk situation. CIOs are in a unique position, because of the data and systems they see, to give special advice to their CEO and colleagues. Managers chose to ignore the risk elements. CIOs can make sure information is collected, but it’s what people do with the data that’s critical.

What have CIOs learned about business risk recently?

They can’t just offload responsibility for risk, or for interpreting events, or for making sense of the data we’re collecting. It has to be a collective activity among senior executives and people with deep knowledge of a company’s and industry’s processes.

Since the CIO is in a critical cross-functional position, maybe CIOs should take on more of a role regarding how people are thinking about what information means. IT enables almost everything a modern organization can do, so it does put a special pressure on the CIO.

When a crisis hits, how should ­internal information be ­handled?

You have to bring people together who can make change happen. Frequent physical or virtual meetings are important.

The CIO, CTO and head of software development should all be there to answer questions about what it’s possible to do with IT, as well as to keep on top of how executives are looking at information and what they want to see. Any CIO worth his salt is guided by the principle that information is only meaningful if people use it. That’s the foundation for what drives a modern CIO.

 

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